In his first interview as CEO of the world’s largest unbiased spirits agency, Bacardi’s Mahesh Madhavan tells The Spirits Enterprise why the subsequent 10 years would be the firm’s greatest.
*This function was initially revealed within the August concern of The Spirits Enterprise journal.
“My surname is not Bacardi, but I feel that this is my company and I run it as if it were my own. It’s been a wonderful ride,” Mahesh Madhavan says of his appointment as chief government officer of Bacardi after spending 21 years with the unbiased spirits agency. “Not once in my wildest dreams did I think that I would become CEO. I have always done my job, concentrated on doing it well, and what I know I do well is building brands and getting the best out of people.”
Born in Chennai, India, Madhavan began his profession as an engineer, constructing warships for the navy, earlier than finishing an MBA and shifting into the buyer items business. His drinks journey started at Worldwide Distillers & Vintners and progressed to Bacardi, which he joined in 1997 as India’s basic supervisor for advertising. It was an thrilling time for the fast-rising enterprise, whose namesake rum had simply overtaken Smirnoff to grow to be the world’s greatestpromoting worldwide spirit model.
Through the years, Madhavan was promoted to senior roles all through the enterprise, shifting to varied areas and subsidiaries. In response to the chief, he has all the time sought an intimate understanding of every division he labored in. In his earlier place as Bacardi’s president of Europe, Madhavan even took to becoming a member of the gross sales group on the street to “understand and observe what they do, listen to what they have to say about the company and the challenges they face”.
Final October, Madhavan turned CEO, taking up from Mike Dolan – who, in an interview with The Spirits Enterprise in 2015, extolled the virtues of a “Mike Tyson school of thought” in enterprise.
Dolan turned interim CEO of Bacardi in Might 2014 – a place that later turned everlasting – and in his tenure carried out, by his personal admission, “wrenching change” all through the enterprise. One of many largest transformations was the condensation of Bacardi’s international promoting enterprise into one “major agency relationship” with Omnicom Group. Underneath Dolan, Bacardi then utterly restructured its advertising division, which he admitted led to the resignations of quite a few prime executives. “There are going to be many people who say they prefer the old world, working with hundreds of different agencies, and they are going to have to go,” Dolan stated in 2015. “I want to make it black and white; you need to be on the team, fully committed, and committed to great work. Those who aren’t should go and work for an insurance company.”
Requested if he’s a unique sort of chief to Dolan, Madhavan replies: “I believe no two individuals are the same. Mike was fantastic; he brought a different set of skills and expertise to the organisation. Perhaps mine are slightly different, but I think each one benefits the organisation. He did work that was necessary at that point in time.”
After years of upheaval, Madhavan is now targeted on implementing a cultural shift at Bacardi that focuses on an idea of “the three fs”: fearless, founder and household. He says of the primary precept: “When fear creeps in it’s very difficult to have trust and empowerment, and if you don’t have trust and empowerment, how do you get the best out of people? Being fearless is a fundamental change that we want to drive within Bacardi.”
The second ‘f’ refers to instilling a “founder’s mentality” all through the enterprise to “leave a legacy for the future”. Madhavan says: “If we can convert 5,500 employees across the world to feel that this is their company, can you imagine the pride that this brings to the organisation?”
The ultimate ‘f’ – household – is the “understanding that we act as a team”. Madhavan says: “Life is never about a straight line that goes upwards. You will have ups and downs, and when somebody falls down, you lean over and pick that person up – it could also be a market, it could be a region, it could be a brand, it could be anything.”
The CEO’s staunch perception in nurturing individuals is clear, however this doesn’t imply his expectations are usually not excessive. “When we say ‘family’, it doesn’t mean we will settle for mediocre performance or that we will accept people who don’t perform. You’ve got to give it your best to be part of the family.”
As demonstrated in his earlier positions, by which he restructured companies, carried out new methods and moved from three way partnership to wholly-owned firm fashions, Madhavan is unafraid of change – however solely whether it is useful for the long run. “I have always seen myself as a builder of brands, a builder of people and a builder of business,” he says. “I have never seen myself go into any kind of business and strip away costs to deliver profits, because, frankly, you can do that for the short term but it’s very difficult to sustain in the long run.”
A specific change that Madhavan compliments his predecessors for is the choice to maneuver Bacardi’s US distribution contracts to a single operator. In 2016 the then newly shaped Southern Glazer’s created a devoted community referred to as Transatlantic Spirits to deal with Bacardi’s portfolio out there. Madhavan says that whereas the division initially skilled challenges, it now “works beautifully well”.
He provides: “It’s a great partnership and was perhaps ahead of its time. I have to give a lot of credit to Peter Carr, our president for North America, as he was the one who was fearless in taking that decision when no-one else had even contemplated it. Now there are a few followers, but he was the first mover.”
PREMIUM TEQUILA BOOM
Bacardi’s North American enterprise has additionally undoubtedly been boosted by the group’s acquisition of Patrón, which was accomplished in April. Bacardi purchased a minority stake within the Tequila maker in 2008, when the premium Tequila growth was in its infancy, and now owns 100% of Patrón Spirits Worldwide – valued at US$5.1 billion.
“Both John Paul DeJoria [Patrón cofounder] and Ed Brown [Patrón CEO] have been fantastic partners right from the get-go,” enthuses Madhavan. “Both of them wanted to see Patrón become a legacy brand for hundreds of years, and the only way to do that was to allow the product to grow in a company that will not only nurture it but also extend it in terms of distribution into far more markets.”
To match this formidable international progress technique, Patrón is working to extend its manufacturing capability by “close to 50%”. The undertaking started earlier than Bacardi’s takeover, and shall be carried out in three levels, the primary of which is “going on stream now”. Madhavan is eager to emphasize that Patrón’s manufacturing group “will be given the same independence as they had before [the acquisition]. We do not want to change the process, the way Patrón is made, and that’s the reason we have kept it completely separate from our existing structure”.
The Patrón deal rounded off a busy M&A interval for Bacardi. Since 2015, the agency has taken minority stakes in Irish whiskey maker Teeling, Ilegal Mezcal and Scotch whisky blender and bottler Compass Field, in addition to majority stakes in super-premium rum model Banks, Leblon cachaça and Angel’s Envy Bourbon.
Madhavan claims that Bacardi has an affinity with such unbiased manufacturers and “understands their values”. Of Bacardi’s acquisition technique, he says: “We have seen that in-house innovation is OK for line extensions, if you are doing a new flavour or a limited edition innovation. But when you put completely new brands with new concepts and new ideas [on the market], that isn’t done too well in house. So we always look for jewels in the making.”
Bacardi will put even higher emphasis on its core manufacturers, particularly its namesake rum, which has struggled to return to progress in recent times. Gross sales fell once more in 2017 to 16.8m instances, based on Model Champions knowledge. What went improper for what was the world’s greatestpromoting worldwide spirit?
In line with Madhavan, frequent modifications in prime administration at Bacardi, together with chief advertising officer roles, resulted in an inconsistent model technique for Bacardi. He claims that to treatment this, the rum’s new ‘Do What Moves You’ marketing campaign will “remain in place for the next 10 years”. He explains: “That’s why I keep saying that our next 10 years will be our best 10 years, because I want our teams, companies, partners and customers to know that we are going to have the same set of leaders driving the same strategies for the next decade.”
Additionally key to Bacardi’s future success shall be premiumisation and diversification. For Madhavan, the problem shall be to create a pricing ladder just like that in different brown spirits classes. “The idea is to build a very premium portfolio, alongside the core range of Superior, Gold and Black, to straddle different price points,” he says. “It’s not a short run; it’s something that’s going to take time to build.”
This yr, the model launched premium line extensions Bacardi Añejo Cuatro and Bacardi Gran Reserva Diez to take a seat alongside its Bacardi Reserva Ocho and Bacardi Gran Reserva Limitada expressions.
In addition to new product improvement, Bacardi will search to reinforce its affiliation with the worlds of artwork, music and sport. “Now is the day of digital, and consumers are looking for relevant brands,” observes Madhavan. “So one of the things we are looking at is how we ingrain our brands in culture.”
An instance of this motion is Bacardi’s partnership with music trio Main Lazer and the next launch of its ‘Sound of Rum’ marketing campaign, which aimed to unite followers of reggae, dancehall, soca, hiphop and digital music. Described as “more than traditional sonic branding”, the collaboration spanned totally different media platforms and noticed the creation of a restricted version rum.
Equally, Bacardi recruited Grammy award-winning music producer Swizz Beatz as its ‘global chief creative for culture’. As a part of the multiyr settlement, described because the “first of its kind” within the drinks business, Swizz Beatz is working with Bacardi to “deliver events, marketing and social activations with industry influencers in exciting and new ways”.
Rum is the soul of Bacardi, an organization based in Cuba in 1862, and which now resides in Bermuda, with manufacturing and distribution unfold throughout the globe. Whereas its namesake model is among the world’s greatestpromoting spirits, Bacardi’s portfolio is turning into ever fuller, and has a particular premium focus.
“When I tell some consumers and customers that we also make Grey Goose, Bombay Sapphire, Patrón, Martini, Dewar’s, Angel’s Envy, Banks, Cazadores, Leblon, StGermain and Dom Bénédictine, they are surprised,” says Madhavan.
The agency has achieved the uncommon feat of turning into a multifaceted international spirits participant whereas remaining fiercely unbiased – one thing Madhavan doesn’t assume will ever change. “We will always remain a family-owned company,” he says, “one that has fantastic brands and one that continues to grow top line. There are no plans to go public and there never will be.”
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